Small Businesses Are Growing 'More Than Ever' in the Philippines

Small Businesses Are Growing 'More Than Ever' in the Philippines. Here's Why

Story by Currie Cator 
Esquire Philippines
13 May 2024

Four years ago, the pandemic forced millions of companies around the world to shut down, stripping many workers of their lifeline. Since then, a lot of people have turned to starting and growing their own businesses. One reason for this is seemingly to have some sort of a "fallback" or "backup plan" in case the same thing happens again.

For lending company Esquire Financing, which provides funding to small and medium enterprises (SMEs) in the Philippines, the pandemic triggered the entrepreneurial spirit of Filipinos, as it showed an opportunity for them to fill in for other people’s needs.

"Sabi nga nila (As they say), necessity is the mother of invention," Kendrick Co, head of strategic partnership at Esquire Financing, told reporters. "A lot of us started seeing kung ano ba ‘yung kailangan ng mga tao (what the people need) [….] and thinking: ‘Oh, I can fulfill that need.’"

"So, definitely, the pandemic left a big impact. Also, sabihin natin na (let’s say) before the pandemic, a lot of us are going to the office. Nung naka-experience ng work from home, ayaw nang bumalik, ‘di ba? So, parang, ano pang ibang option? (Once they experienced working from home, they didn’t want to return, right? So, what else is their option?) ‘Maybe I should start a business.’ People got into that rabbit hole of learning about entrepreneurship," Co added.

A study from recruitment platform JobStreet earlier found most Filipinos prefer a hybrid or remote work setup, which, for them, allows for more work-life balance. According to the poll conducted in 2022, 46 percent of workers are leaning toward a hybrid setup, or a combination of working from home and reporting to the office, whereas 28 percent prefer fully remote work.

But while uncertainty still remains for businesses, given the economic challenges, SMEs are actually doing better than expected. In the case of Esquire Financing, almost all of its borrowers are paying off their loans, it said. That’s even as these small businesses borrowed up to five times their original loans, which is quite a good sign for the economy.

"Over 98 percent have actually paid off," said Co. "They started with a small amount, and then, nakikita namin lumalaki ‘yung business (we see that their business is expanding), so they need more funding to continuously grow. So, on average, parang five times ‘yung re-loan or additional loan (they re-loan or get additional loan five times the original amount)."

Micro, small, and medium enterprises (MSMEs) grew to over 1.1 million nationwide in 2022, according to the Department of the Trade and Industry. This means 99.59 percent of businesses in the Philippines belong to the smaller group, contributing to more than half of the country’s overall employment. 

"I really think it has grown more than ever. You would see now different trends every season, but in terms of ‘are we growing,’ yes, we continuously grow," Trixie Esguerra-Abrenilla, CEO of Mediacom Solutions, Inc. and organizer of the 14th Philippine SME Business Expo, said on the sidelines of the event on Friday, May 10.

This continuous growth of SMEs is what pushes lenders like Esquire Financing to support more Filipino entrepreneurs. The company looks to provide P10 billion in loans to businesses this year from about P6 billion in 2023. Three to four years from now, Esquire Financing also expects to double or triple its current 30,000 client base to 100,000.

"We give out loans as low as P50,000 all the way to P10 million, unsecured. But we can go as [high] as P20 [to] P100 million. [….] So, it really depends on the need of the business," Co said, emphasizing the company has already lowered the minimum loan of P300,000 to P50,000.